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Saturday, April 21, 2007
Trouble continue apace at Hollywood's Young Circle, to the tune of $16.5 Million
It will be a very bad day when Hollywood city manager Cameron Benson & Company see what I've got on the blog soon about a self-evident life and death matter the city continues to ignore right next to the Arts Park at Young Circle.
This, despite my having gone to City Hall in person some nine weeks ago to spell it out in detail to a city employee, even to the point of making a diagram so there was no confusion.
South Florida Sun-Sentinel
FORECLOSURE MAY SOCK HOLLYWOOD IN ITS WALLET PROJECT'S COLLAPSE COULD COST PUBLIC $1.6 MILLION
April 21, 2007
John Holland, Staff writer
Two cornerstone buildings in a project aimed at turning Young Circle into a center of art and culture have gone into foreclosure, leaving taxpayers on the hook for at least $1.6 million in mortgages.
The Young Circle Garage, bought with an $800,000 loan from the city three years ago, goes on the auction block May 17, and the Hollywood Bread Building is being foreclosed while owing at least $800,000 to the city, according to court records. The city never obtained first mortgages, meaning Hollywood is last to be paid if any money remains when the properties are sold.
City officials are negotiating with another developer to take over the project before the auction, but the property owned by HART District Ltd., which covers the entire southeast corner of Young Circle, has been on the block for almost a year without any takers, according to city records.
Community Redevelopment Agency Director Neil Fritz said Friday the city may have to come up with more financial incentives to lure a developer willing to repay the loans and still build a project in line with the city's vision of downtown.
The default by HART ends what city commissioners have called the most mismanaged and ill-conceived project ever approved by the CRA Board, which is comprised of the mayor and City Commission.
Three years ago, in their desire to transform a decrepit slice of downtown into an arts district, commissioners gave HART and its president, Gary Posner, a $7 million package of loans and grants to build a charter school, playhouse and center for the performing arts. Posner bought the entire block between Van Buren and Young Circle, going heavily into debt as South Florida real estate prices soared, county records show.
Although Posner had never undertaken such a large project, the city never conducted any studies to see if he had the financial and technical ability to make it work, commissioners admitted later.
Only the charter school was completed; HART missed every other construction deadline, according to city records. HART repeatedly defaulted on loans and still owes a total of $3.5 million to the city, all of it secured with second or third mortgages on other HART District properties.
Posner would not comment when reached by telephone on Friday, but in the past he blamed rising real estate costs and a lawsuit involving the garage for his troubles.
If Fritz finds a developer before next month's deadline, Hollywood will recoup its loans and the foreclosure problems become moot. If not, the city has to hope some money is left over after all other creditors are paid from the sale price.
"We're perfectly aware of every single deadline and every single foreclosure, and I'm cautiously optimistic that someone will take over Block 58," Fritz said, adding he no longer calls the corner "the HART project". "It's up to the strength of the market to say how much the properties will go for if they are sold (at auction)."
"The worst case scenario is you lose all your money," Fritz said. "But we've taken steps to strengthen our collateral position in the last year, and, depending on the interest in the market, I believe we'll be protected."
The project has been troubled from its inception, beginning when the city helped HART buy the Young Circle Garage from a man who didn't even own the property. After years of lawsuits, HART was awarded the garage and the city took over a third mortgage.
In March, The Hollywood Bread Building, Inc., which sold the building to HART and retained a first mortgage, filed to foreclose, naming Hollywood as owner of a secondary mortgage.
According to court records, Hollywood gave HART an $850,000 loan to buy the Bread Building on Feb. 1, 2004. Posner never made any payments on either loan, according to the foreclosure lawsuit.
In January, after a South Florida Sun-Sentinel investigation outlined years of problems and misspending on the HART District project, City Commissioner Cathy Anderson called for an outside audit, but none of her colleagues backed the plan. Friday, Anderson said she opposes giving money to induce a new buyer."
I will not spend another penny on the HART project," Anderson said. "We've spent plenty already."
John Holland can be reached at firstname.lastname@example.org or at 954-356-4516.
Copyright 2007 Sun-Sentinel Company
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